The economy has been through a prolonged period of slow recovery since 2009, but has failed to really take off.
Small business owners have particularly felt the pinch because they had no resources to carry on with when the local currency was replaced by a basket of foreign currencies.
Some well-run companies ma-naged because they had fixed assets that enabled them to borrow to finance restocking and retooling.
However, the majority are still struggling as the economy chugs on painfully.
The greatest lessons in life are learned from failure. If we haven’t learned from our mistakes in running business, we will repeat them and miss out on opportunities to build successful and growing businesses.
Last week, a delegation from the European Investment Bank (EIB) was in the country to explore and discuss financing opportunities with stakeholders. These are the people really needed because the main reason recovery has been sluggish is because of lack of significant external capital inflows.
As a net importer, this country cannot sustain itself, let alone generate capital for investment in business growth.
The EIB is interested in providing credit facilities to business, with a special emphasis on SMEs.
This will likely happen towards the end of the year, when the ongoing political processes have been concluded and the country has stabilised.
A number of other international financiers will also come in around that time. Now, will your business be ready when the rush starts?
Nearly all institutions that lend to small and medium-sized businesses channel the funds through local commercial banks. This is what happened with the PTA Afrexim facility as well as that of the South African Development bank, which came through Agribank.
Already, the Reserve Bank governor, in the last Monetary Policy Statement, instructed all banks to allocate at least 30% of their lending to SMEs.
In years of working with SMEs, there are sticking points which hinder their ability to access affordable financing facilities from banks. Now is the time to sort these problems out, so that when the opportunity comes, your business will be found ready.
Of course many businesses managed to get loans previously without these things in place from several banks, especially indigenous ones. But we all know the consequences as we watch the Deputy Sherriff’s column in the daily newspapers. Banks have now learned and will not repeat the mistakes of reckless lending.
Keep proper financial records
The moment you approach a financial institution for a loan, you will be asked to produce financial statements for the past two or three years. These assist banks in assessing your businesses’ creditworthiness, as well as growth potential, which directly affects your ability to repay the loan.
Many entrepreneurs hate nu-mbers. That is not a problem. you don’t have to be an accounting or financial genius to run a successful business. But you do need to have the records in place as they measure how your business is performing.
The Companies Act, as well as Zimra, require every business to keep financial records. As an owner, I am sure you are very much interested in seeing how your hard work is paying off. Imagine a cricket or football match in which people just play without keeping score!
If you cannot employ a full- time accountant, there are many consultants who can compile your monthly management accounts at affordable fees. You will find it was worth the while when you really need the financial statements.
I have not previously emphasised to entrepreneurs the importance of investing in real estate.
Its importance was highlighted by Marah Hativagone at last week’s BusinessLink Networking breakfast meeting.
She should know, as she has managed to build a very successful business.
As entrepreneurs, we need to invest in real estate. it is the only asset that will remain when there is a currency change or a major economic crisis. Without property, you will not access the loans your business needs.
Books like Robert Kiyosaki’s Rich Dad, Poor Dad and Retire Young, Retire Rich, describe the importance of investing in property and also give lots of practical advice.
My advice to you is to read such books, then consult professionals in this field in order to avoid making mistakes.
Until next week, best wishes in growing your business.
Phillip Chichoni is a business planning consultant who works with SMEs and entrepreneurs. You may contact him by email, firstname.lastname@example.org. You can also visit http://smebusinesslink.com